Egypt's Balance of Payments Deficit Widens to $1.6 Billion in Q1 FY2025/2026

Overall Deficit Increases Despite Current Account Improvement

Egypt's overall balance of payments registered a deficit of $1.6 billion during the first quarter of the 2025/2026 fiscal year, spanning July to September 2025. This figure represents a widening from the $991.2 million deficit recorded in the corresponding period of the previous fiscal year. The data was released by the Central Bank of Egypt (CBE) on January 21, 2026.

Despite the increase in the overall deficit, the country's current account deficit saw a notable improvement, narrowing by 45.2% to $3.2 billion, down from $5.9 billion in the same quarter a year earlier. This progress was primarily driven by strong performances in key sectors, including remittances and tourism.

Key Drivers: Remittances and Tourism Flourish

The improvement in the current account was significantly bolstered by a surge in remittances from Egyptians working abroad and a robust recovery in tourism. Remittances increased by 29.8%, reaching $10.8 billion during the first quarter of FY2025/2026, compared to $8.3 billion in the prior year.

Tourism revenues also demonstrated strong growth, climbing by 13.8% to $5.5 billion. This increase was accompanied by a rise in tourist nights, which reached 58.7 million, up from 51.6 million in the same period last year. Additionally, receipts from the Suez Canal contributed positively, rising by 12.4% to $1.05 billion.

Capital Outflows and Widening Oil Trade Deficit

The widening of the overall balance of payments deficit can be attributed to a shift in the capital and financial account, which recorded a net outflow of $366.4 million. This contrasts sharply with a net inflow of $3.8 billion observed in the previous year. The Central Bank highlighted that this reversal was partly due to a $5.3 billion increase in banks' foreign assets abroad and significant external debt servicing, totaling $4.34 billion between July and September 2025.

Furthermore, the oil trade deficit expanded to $5.2 billion, primarily due to a $1 billion increase in oil imports, which reached $6.4 billion for the quarter. Foreign Direct Investment (FDI) also saw a slight decrease, registering a net inflow of $2.4 billion, down from $2.7 billion in the previous year.

Economic Context and Future Outlook

The Central Bank of Egypt's report provides a detailed look into the country's external transactions. While the growth in remittances and tourism signals resilience in key economic sectors, the outflows in the capital and financial account and the widening oil trade deficit present ongoing challenges for Egypt's balance of payments. The government's focus on external debt servicing also played a significant role in the recorded outflows.